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Ryder (R) Stock Surges 30.5% in the Past Year: Here's Why

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·3 min read
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Ryder System, Inc. R shares have gained 30.5% in the past year compared with a 35.1% rise of the industry it belongs to.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Reasons for the Upside

As the economy continues to recover from the pandemic-led crisis, Ryder anticipates freight market conditions to remain strong into 2022. Owing to this, coupled with the expectations of improved used vehicle sales, higher pricing in lease and commercial rental businesses as well as strong demand in commercial rental, the company raised its current-year earnings per share (EPS) guidance. It now estimates adjusted EPS in the range of $8.40-$8.50 compared with the previous guidance of $7.20-$7.50. In 2020, the company reported a loss of 27 cents. For the fourth quarter, the company anticipates adjusted EPS in the band of $2.36-$2.46.

Ryder’s free cash flow generating ability is encouraging. Free cash flow at Ryder is now projected between $1 billion and $1.1 billion in 2021 compared with $650-$750 million, expected previously. A healthy free cash flow generation capacity should support Ryder’s ability to reward shareholders through dividends and share buybacks.

Favorable Estimate Revisions

Driven by the above tailwinds, the Zacks Consensus Estimate for current-year earnings has surged more than 100% on a year-over-year basis to $8.52 per share.

Zacks Rank & Other Stocks to Consider

Ryder currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Investors interested in the broader Zacks Transportation sector can also consider stocks like Knight-Swift Transportation Holdings Inc. KNX, Landstar System, Inc. LSTR and C.H. Robinson Worldwide, Inc. CHRW.

The long-term expected earnings per share (three to five years) growth rate for Knight-Swift is pegged at 15%. KNX is benefitting from an improvement in the adjusted operating ratio. Notably, the adjusted operating ratio improved to 82.8% in the first nine months of 2021 compared with 86.6% reported in the first nine months of 2020. In third-quarter 2021, the metric improved to 81.3% from 83.9% a year ago.

This uptick in adjusted operating ratios is primarily driven by higher revenues in the Trucking, Logistics and Intermodal segments. Lower the value of the metric, the better. KNX has surged 36.8% in the past year. Knight-Swift sports a Zacks Rank #1.

The long-term expected earnings per share (three to five years) growth rate for Landstar is pegged at 12%. LSTR is benefitting from a gradual recovery in the economy and freight market conditions in the United States.

LSTR’s top and the bottom line increased substantially in each quarter from the third quarter of 2020, owing to robust revenues in the primary segment — truck transportation. LSTR has surged 25.7% in the past year. Landstar carries a Zacks Rank #2 (Buy).

The long-term expected earnings per share (three to five years) growth rate for C.H. Robinson is pegged at 9%. CHRW benefits from higher pricing and volumes across most of its service lines. Total revenues jumped 42.4% year over year in the first nine months of 2021, with higher revenues across all the segments.

CHRW’s measures to reward its shareholders are encouraging. Driven by the tailwinds, the stock has moved up 1.4% in the past year. C.H. Robinson carries a Zacks Rank #2.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Ryder System, Inc. (R) : Free Stock Analysis Report

C.H. Robinson Worldwide, Inc. (CHRW) : Free Stock Analysis Report

KnightSwift Transportation Holdings Inc. (KNX) : Free Stock Analysis Report

Landstar System, Inc. (LSTR) : Free Stock Analysis Report

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